It does not matter where you let the SQL executable reside.

I never, ever use Drive C for anything. Not even the OS. I install all other instances on the same drive as the Default and then place the actual data files on the drives with the default instance system databases, but into their own respective directory.

I use one spindle for the executables, one spindle for the Data Files, one Spindle for the Log Files and one spindle for the Temp Database. For any really large database, or database that has high transactions, I place that one on its own spindle as well.

Andrew SQLDBA